Prague Prime Homes
Target Financing Structure

© 2014 Prague Prime Homes


For additional information please contact:

Prague Prime Homes Management s.r.o.

Letenska 8

118 00 Prague


Phone: +420 775 985 795


Given the current low interest rates for debt investment projects might be partly financed with debt capital and thereby increase the return potential due to a positive leverage effect. The negotiation of the conditions and preparation of required documentation will be arranged by PPH Management on behalf of the investors however the structure and mechanism will be different depending whether the property will be acquired in form of a direct investment or through a SPV.

In case of an investment via a SPV the loan shall be granted to the SPV that holds the specific property. The directors of the SPV, which will be representatives of PPH Management will conclude the loan agreement on behalf of the SPV under the terms disclosed to the investors in the course of the subscription. In case of an investment with a Trustee being registered in the land register or company register (SPV) for the investor, the Trustee will conclude the loan agreement on behalf of the investors on the basis of an authorization granted in the course of the subscription.  In all cases the loan will be secured though a mortgage on the property.

Loans can be arranged with banks in the Czech Republic or with banks in other countries. Under the current market conditions banks require an equity ratio of at least 30%, resulting in a maximum debt-equity ratio of 70:30. For properties before refurbishment that will not generate recurring income (at least during the refurbishment period) the maximum debt/equity ratio often amounts to 60:40 and in additional banks require certain preconditions such as a pre-sales rate of at least 30%. The interest rates for secured bank loans range currently at 3.5% - 4.0% depending on the individual project.